New Laws for a New Year – 2017 Edition

It seems that the resounding sentiment at the end of last year was that 2016 was a pretty crummy year. An inordinate number of celebrity deaths, horrific acts of terrorism worldwide, and a contentious presidential election cycle left many with a bad taste in their collective mouths. However, as we look forward, with a "fresh start" and a new year ahead, California businesses are left to wonder if 2017 will be as difficult as 2016. Among the 898 bills Governor Brown signed into law in 2016, there were very few significant regulations which would affect California employers. However, where the state legislature left off, municipal government entities, administrative agencies and the courts have picked up the slack, which means that small businesses will continue to feel the pain into 2017 and beyond! The following is a brief summary of the new laws, regulations and court opinions that will change the landscape for California employers in 2017:

Minimum wage laws

While a Texas judge stopped the nationwide increase in the minimum salary for exempt employees (original article found here), California was not granted a reprieve for the increase in the statewide minimum wage which became effective on January 1, 2017. For all businesses with 26 or more employees, the statewide minimum wage increased to $10.50/hour, while smaller companies (≤25) will remain at $10.00/hour until January 2018. Complicating matters, though, are the state's largest cities/counties which are also scheduled to increase minimum wages during the 2017 calendar year, on their way to a $15.00/hour minimum wage by 2020. On July 1, 2017, San Francisco will see its minimum wage increase to $14.00/hour while the City of Los Angeles and unincorporated business sectors of Los Angeles County are set to increase minimum wage for employers with 25 or more workers to $12.00/hour. A table explaining the different minimum wage rates throughout L.A. County can be found here. San Diego sits at $11.50/hour, and – not to be outdone by its Bay Area neighbors – Oakland has set a peculiar minimum at $12.55/hour. Depending on where the worker is performing his duties (for a period as short as two hours in any given workweek), the rate of pay may fluctuate.

While the lowest wage earners will certainly be affected by these minimum wage increases, it is also important to note that these increases have a "trickle up" effect, influencing the minimum salary of even salaried, exempt employees. Most of the statewide "white collar" exemptions set forth in the California Industrial Wage Commission Wage Orders, require an employee to earn no less than double the state minimum wage in order to qualify as exempt (e.g. no obligation for an employer to pay overtime). This would equate to a pay raise of more than $2,000.00 per year in order for exempt employees to maintain their status.

Mandatory Sick Leave

Another convoluted state vs. city vs. county variance in the law is in the relatively new sick leave requirements. The cities of Los Angeles and San Diego require accrual of forty-eight (48) hours of paid sick leave annually, compared to the 24-hour cap permitted by state law. Unincorporated areas of Los Angeles County will have a similar plan in early 2017. San Francisco, Oakland, Santa Monica and Long Beach each have their own unique rules on this issue as well. Again, the location of where the worker performs services dictates which regulation will apply for the calculation of sick pay.

Sexual Harassment Policies

The Fair Employment and Housing Commission (FEHC) issued new regulations, effective April 1, 2016, which require certain information to be included in every employer's harassment prevention and reporting policies. In addition to distributing the DFEH brochure on harassment prevention to employees (Form DFEH 185), employers must now also: (1) communicate their specific policies in writing; (2) list the categories of individuals protected by the Fair Employment and Housing Act (FEHA), (3) provide a specified complaint procedure to ensure that complaints are kept confidential (to the extent possible), responded to in a timely manner, investigated by "qualified personnel" in a timely and impartial manner, documented and tracked; (4) advise and instruct supervisors on reporting procedure for any complaints of misconduct; (5) provide that allegations of misconduct will be addressed in a fair, timely, and thorough investigation; (6) instruct employees that if misconduct is found during the investigation, appropriate remedial measures will be taken; and, (7) ensure that there will be no retaliation against employees for lodging a complaint or participating in an investigation. If your policy does not address all of these issues clearly, this would be a great time to review and revise your handbook.

New Form I-9 for Employee Eligibility Verification

Effective November 2016, and mandatory as of January 22, 2017, a new Form I-9 (Employment Eligibility Verification form) was issued by the U.S. Customs and Immigration Service (USCIS). The form is designed to streamline the verification process, in order to avoid "technical errors" in form completion, which (theoretically) will reduce the number of fines issued to employers for non-compliance. The new "smart" form (online application only) allows for fillable drop-down menus in several key areas where errors occur. A paper copy of the form is still available, but it does not provide any of the new "smart" features. The USCIS also updated the instruction on correct completion of the Form I-9, as part of the new form, which can be found here.

"Associational" Disability Discrimination

In a very peculiar case, a California court of appeal significantly expanded the duty for employers to provide reasonable accommodations to its employees, adding protections for those who are associated with a disabled person. Castro-Ramirez v. Dependable Highway Express Inc. (2016) 2 Cal.App.5th 1028. In that case, Mr. Castro-Ramirez was the caretaker for his ill son, who required nightly dialysis. For years the employer accommodated his request for a modified work schedule to accommodate his son's needs, but a new supervisor, who was initially unaware of the son's condition, changed that accommodation. After Mr. Castro-Ramirez was terminated for refusing to return to the original work schedule, he brought a claim stating that his association with his son (a disabled individual under both the ADA and FEHA definitions) was the reason behind the decision to terminate. The appeals court agreed. In December, the California Supreme Court denied the opportunity to review this decision, effectively making the appellate court decision the "law of the land." As such, employers should make sure that they are engaging in the mandatory "interactive process" when an employee requests a reasonable accommodation arising out of an "associated party's" disability, and should be cognizant of these issues when making critical employment decisions (e.g. promotion or termination of employment), as the newly created protected class is also a basis for an employment retaliation claim.

These are only some of the highlights from the 2016 year that was. For more information on these, and other new topics in the law, please be sure to join the Poole & Shaffery team during the annual Employment Law Update presentation on Tuesday February 21, 2017 at noon at the Hyatt Regency Valencia. Please visit www.EmploymentLawRSVP.com for further details, or to purchase tickets. As always, this information is intended to flag issues in the law for California employers. It does not replace or substitute comprehensive legal advice which can be provided by competent legal counsel with experience in the employment law arena. We encourage you to contact counsel for a more detailed analysis. Happy New Year!